Consumer sentiment strong: First it was business confidence that remained solid, despite two rate rises this year and lot of talk about more to come.  Now consumer confidence has held up in April, resisting the two RBA rate rises and that jawboning on property prices, health spending and the population concerns.  The Westpac/Melbourne Institute consumer sentiment index fell by just one in April to a level of 116.1 from 117.3 in March.  That’s close its highest level in three years and like business confidence, suggests that consumers remain very confident about their present and future prospects.  “This is a surprisingly strong result,” Westpac’s chief economist Bill Evans said in a statement.  “Despite a second consecutive increase in the standard variable mortgage rate of 0.25 per cent in April the Index has hardly moved.”  With many economists (including NAB chief Alan Oster and Westpac’s Bill Evans) expecting another rate rise at the RBA meeting next month, the prospects are that consumer will weather that move as well.  The latest survey was held April 5-11, so it coincided with the rate rise decision from the RBA.  Perhaps both surveys (and the associated survey of business conditions by the NAB, which were even stronger than confidence), are suggesting that the RBA might have to delivery further rate rises after May simply to make sure consumer optimism doesn’t translate into higher expectations about inflation, which remains the RBA’s main game.

Greece pays more: So Greece has been saved? Well, think again after the first sale of government debt since the eurozone/IMF backstop package was outlined on Sunday. Overnight  Greece sold new six- and 12-month debt to roll over existing loans. It wanted to sell €1.2 billion, but demand was so strong that it sold €1.5 billion. End of story, pass the ouzo, Stavros and kick back? Far from it. The interest rate on the debt tells the story: For the six-month notes, Greece will pay 4.55% compared with 1.38% in a similar issue earlier in the year. That’s a very demanding 3.17% premium to the cost of the earlier issue. For the 12-month note a similar story; Greece will pay a yield of 4.85%, compared with 2.2% in January of this year. That’s a premium of 2.65%. And that will go on as Greece rolls over more and more short-term debt and watches its interest costs skyrocket.

No joy in these rates: In case you felt that the smaller premium for the longer-dated security was a modest point in favour of Greece’s future, look at the premium Greek 10-year bonds traded at over German bonds of the same maturity overnight: 3.75%. The market yield on these Greek bonds was 6.89%, nowhere near the 5% or thereabouts suggested in Sunday’s support package. Watch Greece rapidly head for that package, simply to ease the intensity of the pain, not cure the illness.

What’s a little deflation? Japanese business and consumers must be used to deflation, but figures out yesterday show that wholesale prices fell a very nasty 5.2% in the financial year ending March 31. That was after a fall of 1.3% in the month of March from March 2009. But it was up 0.2% on February. March was the 15th consecutive month the corporate goods price index of the Bank of Japan had fallen.

Thank China for higher oil prices: Importing 29% more oil and associated products (petrol and diesel) in February and March (and expectations of more to come) was bound to push up world oil prices, no matter how sluggish demand from the US, Europe and Japan remains. And that’s what’s seen the International Energy Agency upgrade its forecast for global oil consumption to a record level in 2010. The IEA has raised its forecast for world oil demand growth this year by 1.67 million barrels per day (bpd), (up 100,000 bpd) to 86.60 million bpd this year, up from 84.93 million in 2009 and above the previous high in 2007 of 86.1 million bpd. The news had no impact on world oil prices, which fell for a fifth day, wiping out the last of the gains from the end of last month.

But more production emerges: The IEA raised its forecast for non-OPEC output in 2010 by 220,000 bpd to about 52 million bpd due to higher output by OECD countries. Overall, non-OPEC supply is expected to rise by about 500,000 bpd this year. As a result, the IEA estimated demand this year for OPEC crude and stocks would fall by 200,000 bpd to 29.1 million bpd. Members of the OECD have seen their consumption fall by 5.1 million bpd since 2006 to 45.4 million bpd, but rapid growth in nations such as China and India has seen non-OECD demand soar by 5.5 million bpd to 41.2 million bpd over the same period.

Digital reality: Those who doubt Eric Beecher’s scepticism in Crikey this week of the perils of Big Media believing it will be saved by the Ipad and other digital devices, go to Page 43 of the current hard copy of The Economist (or pay and find it behind its paywall) and the story on how the music and magazine industries are reacting to the digital advance. Old hat, I hear the digerati snort. No, an unwelcome reality for them and the likes of Apple, etc.  The  British Phonographic Industry trade group says that in 2009, Brits bought 113 million old-fashioned CDs and 16 million digital ones; they downloaded about 150 million individual tracks, which translates to about 15 million CDs. So at best 28 million-30 million digital CD recordings, versus 113 million old-fashioned ones.  As The Economist said, any music label that gave up its CD sales would be giving up most of its sales. The story points out that the basic CD is now seen as “too cheap” and buyers want more, so DVDs and T-shirts and other merchandise are included, at higher prices and fatter margins. For example, I know of one band in Australia that sells more USB sticks with its music on it at $35 a pop than it does old-fashioned CDs. Its just a CD by another way, with better margins.

Digital reality: And this all adds to the feeling that newspaper groups such as News Corp and Fairfax looking for an Apple-led recovery, while under investing in journalism, face a dying future. It won’t happen. A few years ago the Palm company was seen as cutting edge. This week the company put itself up for sale because it has run out of ideas and money and can’t make it in the digital world. And yet 5-8 years ago it was a big name in PDAs, which were the device before the smartphone. The Ipad is too big for your pocket and the first version isn’t smart enough. But for all the talk of the music industry being made redundant by the download world and peer-to-peer downloading (and the same applies to boring TV), the old-fashioned music industry has proven to be very resilient as the dinosaurs and idiots have been fired, died and departed and new thinking (and money) arrives. There’s a message in this for newspapers. But no one, especially Rupert Murdoch, is listening.

From the pits: According to commodity reports, US beef prices have soared 20% in the past few months and are now within a few cents of $US1 a pound in the futures market, which was where they got to in the big surge in 2008. The bitter winter has left US cattle herds underweight and US cattle ranchers have not been able to keep up feed because of a lack of credit and cash flow. So there will be less meat from each cow when killed. Pig prices are up as well as buyers switch to hogs (the size of the US herd is falling, down an estimated 3% this year).

Spam, anyone? The upshot is either thinner or dearer burgers, more expensive mince, roasts, etc, at a time when cash-strapped US consumers have traded down the food scale. Spam looks good again. Grain prices are, however, very low as America looks to complete its second biggest harvest on record after last year, especially for wheat and corn. That means it should be cheaper to feed herds in the coming northern summer once credit flows are re-confirmed. But watch out for cries of woe from US grain farmers and exporters: US wheat exports are down 20%, prices are down as the US dollar has risen since late last year. Stocks are building to near record levels. The US beef herd is now the smallest since 1963. Cheap buns and expensive meat. And, of course, tomatoes are in short supply in much of the US until mid-summer.

Asia blooms: Earlier in the week South Korea upgraded its 2010 growth forecast to 5.2% from the previous estimate of 4.6% and said first quarter growth was about 1.6%. This morning the Singapore government said the economy grew much faster that expected in the first quarter, so the 2010 growth estimate was being lifted to 9% from 7%. As a result the Monetary Authority of Singapore said it would lift its trading band for the Singapore dollar by an undisclosed amount and aim for “a modest and gradual appreciation against a basket of currencies. Tomorrow China reveals its first quarter growth, will we see a “modest’ rise in the value of the yuan as well? The Asian Development Bank says developing Asia (which excludes countries such as Japan and Australia) will grow by 7.5% this year with China expected to grow by 9.6%. Singapore therefore has joined China, Australia, India and Vietnam in starting to tighten monetary policy

Smile, Tiger: US TV network CBS says the American audience for Saturday’s coverage of the Masters was up 33% from last year, while Sunday’s broadcast of the final round was up 36%. But that was lower than the 20.3 million viewers who watched Woods win his first Masters in 1997, and also below the TV viewership for his second Masters win in 2001. CBS had the final two rounds, cable sports network ESPN had the first two days broadcast. The US Open is on in June. By then, Tiger’s return will seem old hat.